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How Does Chapter 7 Bankruptcy Affect Your Credit and Employment Opportunities?

Law Office of Stuart M. Nachbar, P.C. March 30, 2021

It’s true that, while considered a “last resort,” filing for bankruptcy can give you another chance at financial success. Chapter 7 Bankruptcy is a common choice for individuals and allows the benefit of canceling or eliminating all, or at least most, of your debt. But while this might sound freeing, it’s important to remember the long-term effects that filing for Chapter 7 Bankruptcy can have on your credit and financial independence.

Brace for Impact

With all its powers to wipe your financial slate clean, bankruptcy certainly has an undesirable side. Filing for bankruptcy will remain on your credit report for 7 to 10 years. A history of bankruptcy can have a negative impact on your ability to acquire credit or receive loans.

Beyond your ability to apply for loans or receive credit, a history of bankruptcy can also impact your ability to secure employment, as some companies require applicants to disclose any past experience with bankruptcy. The Balance points out that Section 525(b) of the Constitution allows private employers (though not the government) to use bankruptcy as the basis for denying employment to a debtor. Bankruptcy can come back to bite you even when applying for a professional license. The Balance goes on to explain that while you cannot legally be denied a professional license simply on the grounds that you filed for bankruptcy, it can hurt your chances if seen as a “neglect of financial matters.”

Recovering from Chapter 7 Bankruptcy 

However, as Credit.com points out, it’s important to remember that time is on your side. Even soon after the bankruptcy is publicly visible on your credit report, you might start noticing a slow improvement of your credit score. If you persist in healthy credit practices, FICO estimates that you can regain a good credit score in about five years after filing for bankruptcy. For reference, Credit.com says that an excellent FICO credit score is 760 or higher, so a “good” credit score of about 680 could be obtained roughly half a decade after filing for bankruptcy. Of course, this all depends on the credit habits and financial management of the individual in question.

If you’re considering filing for bankruptcy, or have questions about the impact that filing for bankruptcy will have on your life, don’t hesitate to contact New Jersey’s skilled bankruptcy lawyer Stuart M. Nachbar, Esq. With 20 years of successful experience, Law Office of Stuart M. Nachbar is here to work with you towards your best possible outcome.

Let’s talk today about whether Chapter 7 Bankruptcy is the best choice for you. Give us a call or feel free to contact us online. We look forward to assisting you in achieving a successful financial future!

Law Office of Stuart M. Nachbar, P.C.
354 Eisenhower Parkway,
Suite 2025
PO Box 2205,
Livingston, NJ 07039